Capital Allowances Act 1990 (repealed)

24 Writing-down allowances and balancing adjustments. U.K.

(1) Subject to the provisions of this Part, where—

(a) a person carrying on a trade has incurred capital expenditure on the provision of machinery or plant wholly and exclusively for the purposes of the trade, and

(b) in consequence of his incurring that expenditure, the machinery or plant belongs or has belonged to him,

allowances and charges shall be made to and on him in accordance with the following provisions of this section.

F1 [(1A) If, in a case where the circumstances are as mentioned in paragraphs (a) and (b) of subsection (1) above, the person there mentioned incurs an additional VAT liability in respect of the capital expenditure at a time when the machinery or plant is provided wholly and exclusively for the purposes of the trade, then, for the purposes of this Act—

(a) that liability shall be regarded as capital expenditure incurred by him on the provision of the machinery or plant wholly and exclusively for the purposes of the trade, and

(b) that capital expenditure shall be regarded as expenditure in consequence of the incurring of which the machinery or plant belongs, or has belonged, to him,

and, subject to the following provisions of this Act, subsection (1) above shall have effect accordingly in relation to the capital expenditure constituted by that liability.]

(2) Subject to subsection (3) below, for any chargeable period for which a person within subsection (1) above has qualifying expenditure which exceeds any disposal value to be brought into account in accordance with subsection (6) below, there shall be made to him —

(a) unless the period is the chargeable period related to the permanent discontinuance of the trade, an allowance (“a writing-down allowance") equal to—

(i) 25 per cent. of the excess, or

[F2 (ii) a proportionately reduced or, as the case may require, increased percentage of the excess if the period is a period of less or more than a year, or the trade has been carried on for part only of the period;]

(b) if the period is the chargeable period related to the permanent discontinuance of the trade, an allowance (“a balancing allowance") equal to the whole of the excess.

(3) A claim for a writing-down allowance to be made for any chargeable period F3 ... may require that the amount of the allowance be reduced to an amount specified in that behalf in the claim.

F4 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) For any chargeable period for which a person’s qualifying expenditure is less than the disposal value which he is to bring into account, there shall be made on him a charge (“a balancing charge"), and the amount on which the charge is made shall be an amount equal to the difference.

(6) [F5 Subject to [F6 subsections (6A) and (7)] below,] the disposal value to be brought into account by a person for any chargeable period is the disposal value of all machinery or plant—

(a) on the provision of which for the purposes of the trade he has incurred capital expenditure; and

(b) which belongs to him at some time in the chargeable period F7 ... ; and

(c) in respect of which, in the chargeable period F7 ... , one of the following events occurs, namely—

(i) the machinery or plant ceases to belong to him;

(ii) he loses possession of the machinery or plant in circumstances where it is reasonable to assume that the loss is permanent or, in the case of machinery or plant which was in use for mineral exploration and access, he abandons the machinery or plant at the site where it was in use for that purpose;

(iii) the machinery or plant ceases to exist as such (as a result of destruction, dismantling or otherwise);

(iv) the machinery or plant begins to be used wholly or partly for purposes which are other than those of the trade;

(v) the trade is permanently discontinued (or is treated by virtue of any provision of the Tax Acts as permanently discontinued);

and that is the first such event to occur;

but this subsection shall not require a person to bring into account the disposal value of any machinery or plant which he disposes of by way of gift in such circumstances that there is a charge to tax under Schedule E.

[F8 (6A) In the case of machinery or plant consisting of computer software or the right to use or otherwise deal with computer software, the disposal value to be brought into account by a person for any chargeable period by virtue of subsection (6) above shall also include the disposal value of all such machinery or plant—

(a) on the provision of which for the purposes of the trade he has incurred capital expenditure;

(b) which belongs to him at some time in the chargeable period F7 ... ;

(c) in respect of which, in the chargeable period F7 ... , the following event occurs, namely, he grants to another person a right to use or otherwise deal with the whole or part of the computer software concerned in circumstances where the consideration in money for the grant constitutes (or if there were consideration in money for the grant would constitute) a capital sum; and

(d) in respect of which, whilst the machinery or plant belongs or belonged to him, no event falling within paragraph (iv) or (v) of subsection (6)(c) above has occurred before the event referred to in paragraph (c) above.]

[F9 (7) This subsection applies to all machinery and plant—

(a) on the provision of which for the purposes of the trade a person has incurred capital expenditure;

(b) which belongs to him at some time in a chargeable period F7 ... ; and

(c) in respect of which the following event occurs, namely, the making of an additional VAT rebate to him in that chargeable period F7 ... in respect of the capital expenditure incurred by him on the provision of the machinery or plant;

and where this subsection applies to any machinery or plant the amount that is to be brought into account by virtue of subsection (6) above by that person for the chargeable period related to the making of the rebate shall be increased by the addition of (or, if there would not otherwise be a disposal value for that chargeable period, shall be) the disposal value of the machinery or plant in respect of which that rebate is made.

(8) Except in [F6 subsections (6A) and (7)] above, any reference in this Act to subsection (6) above (but not a reference to any specific provision of it) shall be taken to include a reference to [F6 subsections (6A) and (7)] above.]

Textual Amendments

F1 S. 24(1A) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), S. 59, Sch. 14 Pt. II para. 7(1).

F2 S. 24(2)(a)(ii) substituted (with effect in accordance with s. 211(2) of the amending Act) by Finance Act 1994 (c. 9), s. 213(4)

F3 Words in s. 24(3) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 5(2), Sch. 19 Pt. V, Note 6

F4 S. 24(4) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 5(3), Sch. 19 Pt. V, Note 6

F5 Words in s. 24(6) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 7(2).

F6 Words in s. 24(6)(8) substituted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 68(2)(4)(9).

F7 Words in Act repealed (with effect in accordance with s. 211(2) of the amending Act) by Finance Act 1994 (c. 9), s. 213(1), Sch. 26 Pt. 5(24)

F8 S. 24(6A) inserted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 68(3)(9).

F9 S. 24(7)(8) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 7(2).

Modifications etc. (not altering text)

C1 S. 24 restricted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 59, Sch. 10 paras. 9(3), 11(6), 13.

C2 S. 24 modified (3.5.1994) by Finance Act 1994 (c. 9), Sch. 24 para. 22(4)

C3 S. 24 modified (3.5.1994) by Finance Act 1994 (c. 9), Sch. 24 para. 22(3)